Correlation Between Exxon and The Hartford

Can any of the company-specific risk be diversified away by investing in both Exxon and The Hartford at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Exxon and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exxon Mobil Corp and The Hartford Floating, you can compare the effects of market volatilities on Exxon and The Hartford and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Exxon with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and The Hartford.

Diversification Opportunities for Exxon and The Hartford

-0.4

Correlation Coefficient

Exxon  The Hartford

Very good diversification

The 3 months correlation between Exxon and The is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and The Hartford Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Floating and Exxon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Exxon Mobil Corp are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Floating has no effect on the direction of Exxon i.e., Exxon and The Hartford go up and down completely randomly.

Pair Corralation between Exxon and The Hartford

Considering the 90-day investment horizon Exxon is expected to generate 2.39 times less return on investment than The Hartford. In addition to that, Exxon is 7.99 times more volatile than The Hartford Floating. It trades about 0.01 of its total potential returns per unit of risk. The Hartford Floating is currently generating about 0.18 per unit of volatility. If you would invest  665.00  in The Hartford Floating on October 4, 2024 and sell it today you would earn a total of  110.00  from holding The Hartford Floating or generate 16.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Exxon Mobil Corp  vs.  The Hartford Floating

Exxon Mobil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exxon Mobil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hartford Floating

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Floating are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exxon and The Hartford

The main advantage of trading using opposite Exxon and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, The Hartford can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in The Hartford will offset losses from the drop in The Hartford's long position.

The idea behind Exxon Mobil Corp and The Hartford Floating pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.